Fed’s Beige Book shows stagnant, declining U.S. economic activity

Economic activity was flat or declining across most regions in the U.S. in recent weeks, the Federal Reserve said in its Beige Book survey of regional contacts.

Employment levels were generally flat to up slightly, according to the report released Wednesday. While reports of layoffs were rare, some firms noted cutting shifts and hours, leaving advertised positions unfilled or reducing headcount through attrition.

“Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook,” the report said. 

Prices and wages increased modestly during the period, according to the Fed. 

The Federal Reserve Bank of Cleveland compiled the latest edition of the Beige Book using information gathered on or before Aug. 26. The report includes commentary and anecdotes about business conditions in each of the Fed’s 12 regional districts, collected directly from businesses and other contacts. 

The number of districts reporting flat or declining activity rose to nine in recent weeks, up from five in the prior period. Economic activity grew in three districts. Contacts, however, generally expected economic activity to remain stable or improve somewhat in coming months. 

Additionally, job seekers said finding employment was becoming more difficult and taking longer. 

Recent data has painted a similar picture. A weakening in the U.S. job market, alongside declining inflation readings, prompted Fed Chair Jerome Powell to say last month the time had come for the . central bank to lower interest rates. The first cut is widely expected when policymakers meet Sept. 17-18 in Washington.

The unemployment rate has inched higher in recent months and employers have pulled back on hiring. U.S. job openings fell in July to the lowest level since early 2021, according to a separate report released earlier Wednesday.

In a press conference following Fed officials’ latest gathering, Powell praised the Beige Book and said he takes anecdotal data seriously.